Global Workers Are Ready for Retraining

Joseph Fuller, professor at Harvard Business School, says that the story we hear about workers being afraid for the future of their jobs might not be right. In surveying 11,000 people in lower-income and middle-skills jobs and 6,500 managers across 11 countries, Fuller discovered that contrary to what bosses believe, many employees are excited about new technologies and willing to be trained in new skills. But they don’t always know what they need to learn or how to access and pay for it. Organizations can do a better job of identifying the skills gaps they have or will soon face and using their existing workforces to fill them. Fuller’s project is a joint venture between the HBS Project on Managing the Future of Work and the Boston Consulting Group’s Henderson Institute. He’s a co-author of the HBR article “Your Workforce is More Adaptable Than You Think.”

What does the workforce of the future look like? How can we adapt to an increasingly dynamic global economy? How many jobs can we automate? What new skills will people need? And what’s the plan for getting from here to there?

These are some of the questions that keep business leaders up at night. Many assume that the employees they currently have, especially those in lower income, middle-skills jobs, might not be able to make the transition. They’ll need to be laid off, replaced by technology or younger people.

But our guest today says that managers around the world are underestimating their workers’ willingness and ability to learn. If they instead adopted a more innovative approach to retraining, it could yield huge benefits.

Joseph Fuller helped conduct a survey of thousands of workers and leaders across 11 countries in a joint venture between Harvard Business School’s Project on Managing the Future of Work and the Boston Consulting Group’s Henderson Institute.

ALISON BEARD: So, let’s first talk about your survey. What kinds of workers and managers did you speak to in all of these countries?

JOSEPH FULLER: Well, for the managers, we looked at companies of all size, different industries – service, manufacturing, export-oriented, strictly domestic – across eight countries. For the workers we looked actually at a broader set of countries, eleven countries, and we specifically looked at workers who on average had less than the median household income in that country, and the population was limited to people who had two years of post-secondary education or less. So that combination gave us a population of middle-skills workers, who are not enjoying the type of uplift we see for knowledge workers and people with advanced degrees.

ALISON BEARD: So these are companies that are primed for lots of change in their industry, and then workers who might be at risk for being out of work soon?

JOSEPH FULLER: The workers who are most commonly assumed to be at risk. If you look at the data in the developing world, the workers that have been displaced over the last 20 years tend to be high-paying, middle-skills workers who do routine work.

I mean, that conjures up images of assembly line, and that’s right. That’s a classic routine job. But it’s any task that has just a modest amount of variability around what you have to do. So a big category of workers that’s been affected by technology in the last 20 years are middle-skills, white collar workers who did routine work, like processing health insurance claims, or keeping personnel records.

They only had four or five main tasks that constituted the bulk of their jobs, and so the vast majority of those transactions, in the case of, let’s say, human resource systems, could be captured in software.

ALISON BEARD: And what did you hear from these workers? What surprised you?

JOSEPH FULLER: Well, if you read a lot about the popular press, very often the kind of underlying logic is a deer in the headlights – scared to death of what’s going to happen, very, very worried that they will be made redundant. And very often very evocative and heart-wrenching stories of people who have suffered that and now are having an almost impossible time finding new work that is equivalent in salary and benefits to that which they lost.

And I don’t want to even remotely dismiss the likelihood of that. That does happen. And it’s very, very difficult on those populations. Having said that, the general characterization that is often either explicitly stated in that coverage or implicit in that coverage is powerlessness, being acted upon by global forces. It’s really a story of victimization. So we wanted to test that.

What we found, in fact, was quite surprising to us. The first is that this population who we would anticipate would feel most exposed is actually rather excited and bullish by the prospects that change in the workplace can have.

Many of them thought that technology had the prospect of making work more interesting, less dull, less dangerous in some instances. We often got comments like, “I know how my smartphone has kind of improved my personal life. If this type of technology were in my workplace, maybe I’d have to less things that I find very boring or unfulfilling or actually aren’t that productive.”

Another example was with things like gig economy, job platforms. Maybe I can qualify for a second type of job. Or maybe I can find an alternative source of income. But the overall finding was not one of, I’m scared to death of this, and I’ve adopted some kind of fetal position. It was, these are pretty encouraging trends and might have a favorable impact on my life.

ALISON BEARD: But that stood in stark contrast to what you heard from managers.

JOSEPH FULLER: Yes. The first reaction of managers were, my workers are scared of the future, and they’re anxious about what’s going to happen. And then we talked to managers about what would be the barriers to workers adding to their skills and what were the types of attitude of workers? What we consistently got was an undercurrent, in both interviews and our survey data, that workers want someone to make this problem go away.

The number one word I would describe, to describe workers’ attitude about change is “agency”. They said consistently: “I am responsible for getting ready for the future. I’m not expecting the government to do it for me. I’m not expecting my employer to take me by the scruff of the neck and lead me there.” There was a real misfit between the way employers we think, for lack of a better term, stereotyped the employees as, once again, deer in the headlights, whereas in fact, they’re not that at all. They want to get ready for the future.

ALISON BEARD: So these workers want to jump into the future with both feet. They want to build these new skills. But something’s stopping them from doing it. So what is holding them back?

JOSEPH FULLER: Right. This is something that is common across all the markets. And I think the overarching barriers can be described as falling in two categories. The first has to do with knowledge. They have a sense that they need to get prepared for the future, that there are going to be new requirements for them to keep their jobs or to qualify for advancement in their workplace, but they’re not quite sure what it is.

They’re not sure what specific skill is really relevant for the future for them, where they should get it – what would be a credential that their employer would accept or embrace as, we think Joe needs to know more about digital controllers and how to program them. If he went to the location community college and took this course, we would welcome that as an endorsement of his skills in that emerging area.

The second is economics. These are not highly paid people. These are the type of people we talk about as not being able to endure a couple of unexpected financial pinches, like a car wreck or a big auto repair bill or a healthcare emergency. They do not have a bank account, a tax deterred training account or something like that which they can draw down to do this, nor do they have a lot of time, and those things are collinear.

If to get this credential, I’d have to reduce my working hours, I’m reducing my income. I may not be able to pay my rent, feed the kids, support my parents, whatever it is I’m doing. So because these are people that don’t have a lot of slack in their systems, it’s very, very difficult for them to match what they need to do, where they need to do it, how they need to finance it, and where are they going to get the time? That’s a very difficult equation for them to balance.

ALISON BEARD: Right. So now we’re getting to the crux of the matter. They need help. So where are we going to find this help? Is it government programs? Is it organizations?

JOSEPH FULLER: That is often very strongly influenced by where the worker is. So if you’re talking about an aspiring worker in Central Europe, they would be entering the workforce through a very carefully curated, tried and true apprenticeship system, where educators are aligned with employers to define what those skills are.

But if you go to the United States, we do have things like workforce boards and community colleges which can be great resources, but they’re very, very poorly configured to support adult learners. Saying to somebody who’s working in a manufacturing or service setting, has an hourlong commute to get to an eight hour job, and then an hourlong commute home, oh, you should stop by the community college every Tuesday, Wednesday and Thursday from 3:30 to 6:30 for the next six months to get your certificate in whatever it if you need to learn to keep your job or qualify for advancement, and hope that your fourth grader, second grader and kindergartener are good at warming up the frozen dinners, because they’re going to have to do that, or we hope you’ve got neighbors or parents or a spouse that can do that. A bit unrealistic.

We believe that the first thing here is for employers to look at their own data. They all put, almost universally, the skills of my current workforce or the accessibility of people with the relevant skills as they’re most pressing current concerns. If that’s your most pressing current concern, as an executive, your job is to manage that situation, not to observe it and be worried about it. What this data tells you is, you’ve got a population that’s willing and eager to try to fill those gaps. And they work for you today.

That’s a pretty important thing to keep track of if you’re an employer, for a couple of reasons. First of all, at this level of skill, what causes a company to make what I’m going to call a failed hire, we posted a job, we hired somebody, and they didn’t work out, that’s very expensive for a company.

The smallest estimates in terms of what that costs to the company is about 20 percent of what you pay that person annually, and when you really start adding indirect cost and some of the other things that are clearly related to unplanned turnover, you’re easily getting to 30 or 40 percent of one year costs. So that’s a big cost.

ALISON BEARD: And how does that compare to the cost of retraining the workers you already have?

JOSEPH FULLER: That’s the math you need to. But one thing we can say about when you’re deciding to invest in that worker, you’re making that judgement based on their personnel file, not their resume. I know that Alison has not missed a day of work for eight years. I know that she always qualifies for the maximum number of rollover days every year, because she never misses a day of work. I know she’s reliable.

I don’t know if she’s got the aptitude to do this job, but many of the variables that would have caused that failed hire, I have definitive insight about Alison, that she’s not going to suffer from those. So now I’m making a much cleaner investment decision.

OK, maybe I need to send her to that community college from 3:30 to 6:30 for six months to qualify her for the type of job I’m finding it hard to fill. That might cost $3,000 or 4,000 of tuition. That, she may say that she needs to time phase her work and start earlier in order to do that. She may say, “I can’t start until next quarter because my spouse can then accommodate the fact that I’m only going to be getting home at 7:00 at night, not when I normally get home at 5:30.” But all of those considerations are now weighed against the chance, the odds that she’s going to be a success when she does that.

ALISON BEARD: Does the calculus change, though, if I’m 50?

JOSEPH FULLER: It might. But we know a couple of other things there. That in all these markets, with the exception of India and Indonesia, the actual working population is either stagnant or falling. So if you look at the most severe example of this, of course, is Japan, which has a negative population growth rate, i.e., the place is shrinking.

What you see in Japan is a very active set of corporate and government policies to try to keep people in the workforce longer, and to put them in jobs that they’re actually able to do that reflect the process of aging. So there are very innovative companies in Japan that manufacturer exoskeletal devices which help older people, let’s say construction sites or manufacturing settings of warehouse settings, supplement their physical strength to lift weight.

And the reason for that is that Japan desperately needs people between the ages of the historic retirement age, which is around 60, to keep working into their 70s and beyond if they’re so inclined. In places like the United States, where a number of people have inadequate retirement savings, extending that work life for an older worker is a benefit both to society and to that worker.

ALISON BEARD: Is there any danger that workers are actually overestimating their ability to learn all of these new things? So they’re willing, they’re excited about it. But they actually can’t.

JOSEPH FULLER: Sure. And I think one of the things that any employer would need to understand is, essentially their workforce demographics, not just from an age and gender point of view, but from a skills point of view. And they’re going to see logical pathways from current jobs to the jobs of the future. What we know does not work is taking somebody that has worked, let’s say, in construction or mining, and trying to turn them into a cybersecurity programmer.

ALISON BEARD: Coal miner to coder.

JOSEPH FULLER: Coal miner to coder. It’s a wonderful story. It’s a wonderful image. And it’s not that it’s inconceivable, but it’s so unlikely and so unrelated to the actual lives and aptitudes of people as to be deceptive.

But let’s take that coal miner. Coal mining shares a lot of DNA with other jobs. Construction. So if I’m a coal miner, there are a lot of things about the workplace I’m used to. I’m used to the fact that I’m around big, dangerous machines. And you’d better pay attention to them, or you’re going to get hurt. I’m used to working in teams, so my work is influenced by, and my work influences those other people around me. I know that if there’s something that seems to be a safety problem, I need to call it out right away.

So there’s been great research done on what those transitional maps, what those shared genomes – to change my biomedical reference – look like. If I’ve got a workforce that does certain tasks well, how I position them in jobs I know I’m going to need in the future that draws on that DNA is the question.

ALISON BEARD: So business leaders can find these transitions within their own organizations?

JOSEPH FULLER: Yes. And this gets to another population myth about that technology just blows away jobs. That doesn’t happen very often. What technology actually does is replaces tasks within jobs. It makes them more efficient, safer, higher precision.

So many employers are worried about future skills. They’re not worrying so much about how I go from the workforce I’ve got to some completely transformed workplace. They’re worrying about, will my machinist of today be able to interact with the more highly-programmed, more highly-automated production cells of the future?

ALISON BEARD: You looked at such a wide swath of countries, from Indonesia to the United Kingdom, Brazil and China, to Sweden and France. Did you really see the very same dynamic in all of those countries? Where there any outliers?

JOSEPH FULLER: There were some outliers. The two big outliers are France and Japan. In France, there was a distinctly greater emphasis placed on the workers to say the government’s responsible for this.

ALISON BEARD: For retraining.

JOSEPH FULLER: For retraining. That that’s who I’m looking for. And that reflects everything, I presume, from local political conditions there to how training has been conveyed in the past, to the belief with this constituency that employers are unlikely to do this, and the government’s essentially going to force them to do it.

The second market was Japan, which was easily the most confused of the populations in terms of clarity of who was responsible. They’re almost evenly distributed between my employer’s responsible, I’m responsible, the government’s responsible.

In Japan you have large pockets of a phenomena that we’re beginning to see in European countries and the United States which are effective job deserts, where the historical employment base has gone away. It could be natural resource-oriented, for example, in the United States.

And it will be interesting research for us or others to pursue going forward to look at some of these markets separately and drill down. In fact, one of our motives for doing this work, Alison, was to start raising some additional questions, like the question of employers, have you really done the math here on the cost of playing the spot market for labor, versus the cost of taking the proven workers you’ve got and getting them where they need to be, because that’s where they want to go?

ALISON BEARD: Yeah. And so everywhere else in the world, you found this same dynamic, workers ready, willing, and able, managers thinking it’s a worse situation than it could be. Are there countries that are already doing a better job than most of moving that adult work force into the new skills that they need?

JOSEPH FULLER: Well, there was some variability on the employer’s attitude, too. So for example, Indian employers were more optimistic about their workforce’s attitude about getting new skills than let’s say, OECD member countries.

But I would say that what you see pretty consistently is, everybody’s got some pieces of the puzzle figured out, and nobody’s got it all figured out. If you want to look at a market that has a very dynamic online distance learning capability, with an exploding inventory of quality resources, the United States is dominating that – everything from edX to Coursera, Khan Academy – to support learning.

If you want to look at a country that has done a very, very good job in the last 20 years or so, beginning to encourage employers to really revisit this work based learning for aspiring workers, or on-the-job training to keep their current workers, it would be the U.K., where they introduced several governments ago, a payroll tax of half a percent of payroll, and they basically said to the employer, “You pay this tax, and we will rebate it to you up to 100 percent if you spend that money on either apprenticeship programs or work based learning for your workers. Or you can just send it to us, and we’ll spend it on something.”

Well, guess what, 100 percent of the employers said, “Well, if you’re going to take it away from me, I want it back.” But the U.K., through that period, has gone from being distinctly behind in multiple categories of skills for this type of worker to be much more competitive with the Germans, the Swiss, the Danes, the Austrians, countries that with 50-year histories of very robust institutionalized apprenticeship program and work based learning program

You can see progress also where you’ve got companies, often this happens, larger companies are early movers in creating new approaches. But you can see the German and Swiss multinationals really beginning to try to infuse structured work-based learning in their international operations.

So if you go down to some of the states like South Carolina and Tennessee that have been sites of significant foreign direct investment in things like manufacturing – companies like BMW, Siemens – they are beginning to bring their personnel practices from Germany and apply them to American workers. Apprenticeship systems, cooperation with local educational resources, high levels of technical training for specific jobs, engaging even younger people, 12 and 13-year olds about first of all, you should stay in school.

And secondly, here are the types of things you should stay interested in if you really aspire to work at our BMW plant. The largest BMW plant in the world is in South Carolina. And they’re saying to kids, “you know, math isn’t torture. It’s actually fun.” And this is some of the ways you can do it.

And I’m sure there are still South Carolinians who are convinced that math is torture. But more of them are beginning to be able to put two and two together, no math pun intended, that gee, if I stay in high school, and I work hard at math, I can get a job at the BMW plant. And that’s one of the best jobs near where I live you can get.

ALISON BEARD: Is there anything else companies should be doing?

JOSEPH FULLER: Well, I think in a lot of industries they need to be cooperating more. It’s true that there are strong industry associations in certain markets that begin to define skills. But in a lot of markets, certainly, everywhere from Brazil, India, United States, would be good examples – the employers still view the game as one of competition. I’m trying to get the good workers. And I kind of hope you get the bad ones.

And that’s great if you can win that game. But it’s also effectively, it’s a version of the tragedy of the commons. If we’re all going to try to cherry pick the education system, if we’re all going to try to keep obscure my view of what I’m going to need be successful in the future, the likelihood there’s a buoyant supply of people who are qualified for that work and interested in it is low.

So now I’m reduced to playing the spot market for labor, and I’d better be the most well-regarded employer that pays the most in the right location to win that battle. But if I’m in the wrong city, I’m not the top dog in the industry, I’m not the job that everyone wants coming out of whatever school. It could be trade school. It could be MIT. If I’m smaller, industries are way better hanging together, or otherwise they’re going to hang separately.

Defining what the skills are, working with educational resources to have them articulate those skills in curriculum, in courses of study, working with my labor unions about how I’m going to soft land the workers I’ve got, and a lot of markets can’t get rid of, except at exorbitant cost, to have them future ready.

That type of alignment is not, should not just be happening at the company level. It should be happening at the industry level. And it should be facilitated by government policy as opposed to impeded by policies that cause those employers to worry that if they started talking about the future, later on some justice minister or some state attorney general in the United States will decide that they can get kudos for suing the industry for colluding on what skills were needed.

ALISON BEARD: Well, Joe, you’ve given us a lot to think about. Thank you so much for coming in and talking with me today.

JOSEPH FULLER: My pleasure, Alison.

ALISON BEARD: That’s Joseph Fuller, a professor at Harvard Business School. He’s also the co-author of the HBR article, “Your Workforce Is More Adaptable Than You Think.” You can find it in the May/June issue of Harvard Business Review or on HBR.org.

This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Adam Buchholz is our audio product manager. Thanks for listening to the HBR IdeaCast. I’m Alison Beard.